Ad Hoc

Presidential Ad Hoc Fact-Finding Committee on Behest Loans v. Desierto (14 August 2001)

Facts
During Ramos' term of office, he issued the following: 1. Administrative Order No. 13 - Created the Presidential Ad Hoc Fact-Finding Committee on Behest Loans. 2. Memorandum No. 61 - Expanded the functions of the committee to investigate all non-performing loans whether behest or non-behest loans

In 1974, Apparel World Inc. applied for an Import Letter of Credit with the Philippine National Bank (PNB) in the amount of DM15,000,000.00 (P40,660,114.86) for the importation of machinery, equipment and accessories for a garment factory. Less than a month later, PNB approved the loan without collateral.

The Presidential Ad Hoc Fact-Finding Committee classified Apparel's loan with PNB as a behest loan. Thereafter, in 1998, a complaint was filed with the Ombudsman for violation of Section 3(e) and (g), R. A. No. 3019 (Anti-Graft and Corrupt Practices Act).

The case was dismissed by the Ombudsman on the following grounds: 1. Lack of evidence 2. Prescription
- The prescriptive period began to run from the time the loan was executed and not when it was discovered as an alleged behest loan. 3. Memorandum Order 61 and Administrative Order No. 12 operated as ex post facto laws.
- When the loan was approved in 1974, there was no law which classified it as a behest loan. Thus, AO 12 and MO 61 which were issued in 1992, operated as ex post facto laws.

Issue | Holding | Ratio | Whether or not the prescriptive period begins to run on the date of the commission of the offense

| No | According to Act 3326, the prescriptive period begins to run either at the time of the commission of the offense or the discovery of its commission. According to the Ombudsman’s decision, the period of prescription began at the time of the commission of the offense. However, the Supreme Court held that it would have been impossible for the State to know about the violations of RA 3019 on the date of its commission due to the fact that the public officials concerned connived or conspired with the ‘beneficiaries of the loans. Thus, the prescriptive period begins to run from the discovery of the commission of the offense. Accordingly, prescription has not yet set in. | Whether or not the Supreme Court can reviewthe exercise of discretion of the Ombudsman in prosecuting or dismissing a complaint before it. | No | In Alba v. Nitorreda, the Supreme Court held that “it is beyond the ambit of this Court to review the exercise of discretion of the Ombudsman in prosecuting or dismissing a complaint filed before it. Such initiative and independence are inherent in the Ombudsman who, beholden to no one, acts as the champion of the people and preserver of the integrity of the public service”.It would also be impractical for the Supreme Court to do so since the court would be swamped by petitions assailing the Ombudsman’s dismissal of their complaints. | Whether or not the Ombudsman acted with GAD in dismissing the case against the respondents | No | The Ombudsman’s dismissal of the case was based on substantial evidence. |

Note - Elements of a behest loan:
a. it was undercollateralized;
b. the borrower corporation was undercapitalized;
c. direct or indirect endorsement by high government officials like presence of marginal notes;
d. stockholders, officers or agents of the borrower corporation were identified as cronies;
e. deviation of use of loan proceeds from the purpose intended;
f. use of corporate layering;
g. non-feasibility of the project for which financing was sought and
h. extraordinary speed at which the loan release was made.